Cobalt Insurance and Capita Managing Agency have received approval from Lloyd’s of London to launch the first Sharia-compliant syndicate of the specialist insurance market. Once it gets full approval, the new Lloyd’s business will be named Cobalt Syndicate 1438, which is the Islamic calendar’s number for the year 2017. Cobalt founder Richard Bishop said the aim of the syndicate was to look to underwrite new business from emerging markets and working with others in Lloyd’s to extend their participation in those markets. Cobalt will start underwriting in the first quarter of 2017 with initial focus on developing a property and specialty-focused book of commercial business from emerging markets in the Middle East, North Africa and Asian regions.
According to leading expert on Islamic Finance, Mehmet Asutay, Brexit may have some effect on real estate investments in the UK but London will continue to remain the centre for Islamic investments. Asutay noted that if Islamic finance continues to invest in real estate in the UK, they might find another hub in Europe rather than the UK. He said that having a large amount of liquidity, the Gulf region has contributed to expansion of Islamic financing and he called for expansion of Islamic financing in other developing countries. Professor Asutay said that in Europe, the UK and Luxembourg have been developing strategies to become important centres for Islamic finance. But the UK is also aiming to become an important centre for teaching and learning Islamic Economics and Finance.
deVere Mortgages and Al Rayan Bank have announced that they have entered into a strategic partnership to offer Sharia-compliant mortgage alternatives. The alliance follows deVere Mortgages’ reporting of an average 55% increase in mortgage enquiries since the UK’s EU referendum, with the majority of these applications from people living in Qatar, the United Arab Emirates, Saudi Arabia, Kuwait, Bahrain, and Oman. Mike Coady, Managing Director of deVere Mortgages said the tie-up with Al Rayan Bank would add real value to their core market, which is Muslim and non-Muslim buyers based overseas who are looking to purchase property in Britain. Sultan Choudhury, CEO of Al Rayan Bank added that deVere Mortgages would help to reach an even wider group of people who are looking for ethical, Sharia compliant home and property finance.
The UK Peer to Peer Finance Association (P2PFA) has released a commissioned study on the economics of the peer to peer lending market in the UK. The study focused specifically on the eight-member platforms of the P2PFA which collectively comprise over 75% of the UK market. Reinder van Dijk, Partner at Oxera consulting, called peer to peer lending a 'real innovation' bringing benefits to both borrowers and investors. According to the report, P2P lending has created additional competition and choice in the market for loans and investment. P2P lending provides new options for retail investors, opening up access to risk-and-return from an asset class of consumer and business loans with net returns of between 4% & 8%. P2P lending does not create systemic risk, P2PFA member platforms provide a level of transparency which empowers investors.
Lawyers have warned that failure to prevent economic crime could lead to more senior individuals being prosecuted for misconduct. The UK government's proposed legislation could lead to deferred prosecution agreements with the Serious Fraud Office. The involved companies would potentially give evidence against individuals implicated in misconduct. According to Judith Seddon, partner at Clifford Chance, the corporate criminal liability will provide for an additional serious consequence of failing to satisfy existing requirements for anti-money laundering and financial crime prevention.
The Bank of England has fined Qatar Islamic Bank’s UK, a subsidiary of Qatar Islamic Bank, for failings in reporting its financial resources to the regulator in 2011 and 2012. The Bank’s Prudential Regulatory Authority (PRA) imposed a fine of 1.385 million pounds ($1.95 million) on QIB for failing to undertake a regular assessment of its capital. Guy Priestley, QIB UK’s interim chief executive, said the problems identified by the PRA have been remedied.
Investcorp organised its annual Investcorp Leadership Program at the University of Oxford’s Saïd Business School. The four-day program, held between 29 March and one April 2016, was attended by 41 aspiring young business leaders from the GCC. The program officially began with a keynote address by Mohammed Al Ardhi, Executive Chairman of Investcorp, who spoke about the importance of innovation and entrepreneurship. Faculty from Oxford Saïd delivered a series of interactive sessions on shaping the markets in which companies operate, embedding entrepreneurship in organizations and scaling family businesses. Demonstrations of the latest research in bioresearch and microscopy were also organised at the University’s Advanced Bioimaging Unit.
Gatehouse Bank plc has announced its entry into the residential property finance market. With a focus on greater London, Gatehouse will offer Shariah-compliant financing solutions for clients seeking to acquire or refinance residential properties. This new product was developed following strong client demand for residential property finance solutions. Gatehouse will offer clients bespoke property finance products, from simple single residential investment finance to more complex company structures including property portfolio and short lease finance. Abdulaziz AlDuweesh, Chief Investment Officer of Gatehouse sees significant opportunities to grow Gatehouse's presence in this market.
GFH Financial Group (GFH) has signed an agreement with Palace Revive Developments Limited worth £100 million to be a partner in the No. 1 Palace Street development in central London, a project being developed by Northacre. Under the agreement, GFH will become an anchor partner for more than 30% of the units in the development, which is located opposite Buckingham Palace. Located in Buckingham Gate, No. 1 Palace Street includes 271,051 square feet of space adjacent to Buckingham Palace in the area between St James's, Mayfair and Belgravia, the development of 72 luxury apartments, a restaurant and health centre. The development is expected to be completed in 2018.
The Church of Scotland has joined forces with Islamic finance experts to draw up a “practical ethical financial solution” to help the poor while sticking to the principles of both faiths. The agreement, which was announced on Tuesday, marks an unusual attempt to promote cross-religious financial innovation. Backers say it is too early to say what “solution” the initiative could yield, but possibilities include the creation of a new financial institution with cross-faith legal articles. The Scottish initiative is supported by international Muslim clerics and experts including Lamido Sanusi, a former Nigerian central bank governor famed for cleaning up the banking sector and now one of the country’s highest Islamic authorities.
Bank of London and The Middle East (BLME) said it would acquire Renaissance Asset Finance as part of efforts to grow its leasing business. Dubai-listed BLME said in a statement the acquisition would be finalised in early April, without disclosing a deal size. The Islamic lender helped launch Renaissance in 2014 when it provided a financing line of 35 million pounds, with both firms seeking to fill a funding gap for mid-sized companies. Renaissance offers financing solutions including sale and leaseback transactions, with a maximum advance of 2 million pounds.
A new Bank of England consultation, which closes on 29 April, builds on a feasibility study carried out last year and sets out two possible deposit facilities, and two possible liquidity insurance models. The idea behind the proposals is to help firms that are prevented by Shari’a law from undertaking activities involving interest to manage fluctuating liquidity demands and ride out periods of particular stress. Although the consultation sets out options for both Shari’a compliant deposit facilities and liquidity insurance, the Bank of England said that it was prioritising the former as the area of greatest demand. Following the consultation and further analysis, it will decide whether any of the proposals are feasible, it said.
Ashraf Piranie, deputy chief executive and finance director at The Nottingham, has received an accolade for his contribution to finance and banking at the British Muslim Awards. Mr Piranie joined the board of The Nottingham in 2007 and was previously the finance director and joint managing director at the Islamic Bank of Britain and director of finance at Alliance & Leicester Plc. One of his most notable achievements was the proactive part he played in introducing Islamic finance legislation to the UK's Finance Acts. He continues to play an important role on UK banking regulation and since 2013 has been a member of the PRA's Practitioner Panel representing the building society sector.
Contrary to popular opinion, Sharia law is not taking over Britain. It is seen as a rule of law that contributes to the way Muslims live. Most importantly, the principles of Islamic finance encourage fairness. The presence of the likes of Allen & Overy, Hogan Lovells and Norton Rose Fulbright shows how far Islamic finance has come. The unwavering investment that has occurred over the Middle East, with offices springing up in Saudi Arabia, Oman, Qatar, United Arab Emirates and Kuwait is a testament to firms taking the Islamic practice seriously. Trainees can develop leadership skills by undertaking research and ascertaining what works for clients.
The central London offices must be run in line with Islamic principles because of a deal with rich Middle Eastern investors. They demanded the buildings be audited by Muslim scholars and subject to special rules in exchange for lending the Government £200million. The deal currently only covers three buildings - Richmond House, Wellington House and a property on Whitehall - and is almost unheard of outside of the Middle East. But Treasury officials hope hundreds of Western companies will follow their lead and turn over buildings to Islamic financiers in similar deals. The exact restrictions under which the buildings must be run which were not spelled out in the text of the deal struck with overseas investors.
Bahrain-based Ibdar Bank has announced that it has made a £8 million investment in a prime new residential project. Angel Gardens, consisting of residential 458-apartments and a total development value of £124 million, forms part of the wider NOMA re-development project aimed at transforming Manchester city centre. The development is being funded through a combination of equity invested by Ibdar and other co-investors and senior debt to be obtained from one of the Banks. Forecasts indicate an expected income return through operations starting at 9.1% on stabilized income, rising to 10.8% per annum after three years of stabilised operations and a targeted IRR of +15% over a five year investment period.
Fixed term deposit accounts, which pay an “expected profit rate” instead of interest, beat the best fixed rate bonds when it comes to earnings. HM Revenue & Customs (HMRC) confirmed that profits from Sharia accounts would count towards the personal savings allowance. Where returns are the economic equivalent of interest (and meet certain other criteria) they are taxed as if they are interest - and will be included within the definition of savings income, according to HMRC. This means Sharia compliant savers will be able to take advantage of the new £1,000 tax free interest earnings allowance if they are a basic rate taxpayer (£500 for higher rate taxpayers).
London-based Cobalt Insurance Holdings Ltd. has announced a strategic investment by Armour Group Holdings Ltd., the Bermuda-based diversified insurance group. Financial considerations were not disclosed. The strategy of Armour focuses on niche operations in the re/insurance and asset management sectors. Armour’s operations include underwriting operations, re/insurance companies, asset management companies and specialist service companies. The investment coincides with additions to the board of Cobalt of former Lloyd’s Chairman Max Taylor as chairman, and Sean Dalton of Armour as a non-executive director. John Turner, chairman of Aon Risk Solutions (UK & Americas), and former Brit Insurance Group CFO Andrew Baddeley also join the board in non-executive capacities.
The City of London yesterday launched a new initiative which aims to cement London's position as a world leader in green finance. The Green Finance Initiative (GFI) will focus on how to mobilize the capital required to implement both the UN's Sustainable Development Goals and the Paris climate change agreement. The unveiling of the new project came as a separate report released by the UN Environment Programme (UNEP) at the GFI launch event highlighted how the UK is currently a global hub in the emerging green finance market. The report, which profiles the actions that have been taken over the past 15 years to incorporate environmental and social factors into the financial sector, argues the UK has evolved a distinctive model of innovation in sustainable finance.
Keith Leach, chief commercial officer (CCO), Al Rayan Bank, has an answer to the question if the new UK stamp duty charges announced in the autumn budget have a negative impact on foreign investment into property. His answer showed that potential investors are looking at the big, global picture. The tax changes — what might be on the horizon — wasn’t figuring in their thought processes. What was in their thoughts was the political and economic instability in the region, he explained. With regard to the impact of the 3% hike across all bands of stamp duty on buy-to-let landlords in the UK, Leach said it could lead to landlords faced with higher charges raising rents, or abandoning the buy-to-let market with a consequent reduction in availability of rental properties.